A look at some of the top news releases that I found interesting this morning.
Red Eagle Mining (RD:TSXV) - Red Eagle is delivering on what they told the market to expect by arranging a $65 million dollar (U.S.) construction financing with Orion Mine Finance. Orion will buy $5 million worth of shares at a price of 33 cents (US) a share on the closing date. Orion previously subscribed for the first trance in early February for $1 million so $4 million remains. Upon closing Orion will own 19.9% of the issued and outstanding shares. Liberty Metals & Mining also owns 19.9% of the shares before this announcement.
Astute investors will note that the price is in US dollars and they can buy RD shares in the open market currently at $0.30 Canadian per share.
As part of the deal Orion will be able to appoint a director to the board of Red Eagle and have the option to participate in additional equity financings if they maintain certain ownership levels in the stock.
"San Ramon is now fully permitted and close to being fully financed to meet the planned capital expenditure of $74-million (U.S.) including contingencies," comments Ian Slater, chief executive officer. "Red Eagle is on track to commence construction by mid-2015 with production in 2016."
Draw down of the credit facility is subject to Red Eagle raising at least an additional $15 million US in equity.
CEO live users have been discussing the news from Red Eagle this morning.
Read: $65,000,000 Construction Financing Announced
Related: Is Red Eagle Ready to Fly?
Seabridge Gold - (SEA:TSX) - Seabridge is out with it's first resource estimate on the Iron Cap Lower Zone at the KSM deposit. The Iron Cap Lower Zone contains 3.1 million ounces of gold at 0.59 g/t and 961 million pounds of .27% copper. Seabridge has identified two core zones at KSM - Deep Kerr and Iron Cap. The team believes that the KSM deposit still has room to get bigger and has a $14.2 million dollar drill program planned for 2015.
Drilling at KSM continues to add resources with 2014 drilling adding 5.4 million ounces of gold and 4.2 billion pounds of copper. The aim at SEA is to grow reserves and resources faster than shares outstanding. Management so far is delivering on this metric with the float only increasing by 1.4 million shares last year.
Seabridge chairman and chief executive officer Rudi Fronk noted that: "This first resource estimate at the Iron Cap Lower zone is further confirmation that, until recently, we have only been seeing the tops of KSM's deposits, with better grades below. Fortunately, the location, size and configuration of these deeper core zones appear to support extraction by the most cost-effective underground mining methods. This is especially true of the Iron Cap Lower zone, which is located close to key proposed infrastructure, including planned tunnels, which could be used to facilitate mining. Given these factors, along with the significantly higher metal values, we are very confident that our core zone program has the potential to achieve its objective of improving project economics."
If investors are looking for a highly leveraged gold stock Seabridge fits the bill. Seabridge has over 45 million ounces in gold resources and with only 48 million shares out almost has 1 ounce backing each share. Seabridge stock will follow the gold price and was as high as $40 in 2010 and now trades at ~$8 per share. Since then the KSM deposit has only increased in size. That being said one issue is the cost of developing this massive project. A 2012 PFS showed a $5.31 billion dollar CAPEX and an IRR of only 12.5% using $3.45 copper and $1330 gold.
Read: Seabridge Gold Reports Large New Resource at KSM's Iron Cap Lower Zone
Related: Seabridge gets approval for massive KSM project
Pasinex Resources (PSE:CSE) - Pasinex caught my eye with impressive zinc drill results from the Pinargozu mine in Adana, Turkey. The Pinargozu mine is a 50/50 partnership with Turkish mining company Akmetal AS. Drill results included 35.5 m of 37.7% zinc starting at a depth of 113 metres.
Steve Williams, chief executive officer of Pasinex Resources, stated: "These latest drill results from our Pinargozu mine project are very encouraging. A number of the holes have intercepted mineralization, and the hole with 35.5 m of 37.7 per cent zinc is our best intercept to date. We are encouraged that we continue to see mineralization in new areas that would indicate that our tonnage potential is increasing. Drilling is continuing on Pinargozu, and we have commenced drilling of the neighbouring Akkaya property."
I have been building a watch list of zinc plays over the last couple months as many analysts are forecasting higher zinc prices in the next couple years. The zinc price has struggled over the last few months though as China has increased production. China is the wild card in the zinc market and it is hard to say how much zinc they have and how quickly they can turn on production.
Klondex Mines - (KDX:TSX) - A tremendous first year of production for Klondex earning $18.3 million or 16 cents per share. In the first year of production KDX management fired on all cylinders and delivered what they said they were going to do and then some. Management under promised and over delivered and is something I wish I saw more of in the industry. Production beat guidance by almost ~25%. Half of the net income came in the fourth quarter with earnings of $9 million.
Paul Huet, Klondex President and CEO commented: "I am so proud of what Klondex accomplished in 2014, none of which would have been possible without the dedication and commitment of the talented individuals who make up the Klondex team. In our inaugural year of production, we recovered approximately 108K gold equivalent ounces, and our working capital increased to $56.0 million."
Klondex is one of my favourite small producers as they generate free cash flow at current gold prices. 2015 production is estimated at between 120-125,000 gold equivalent ounces at an all in sustaining cash cost of $800-$850 (USD) per ounce. I know Frank Holmes of US Global is a big fan of KDX as well he mentioned the company recently in Going Vertical promotion.
Read: Klondex Mines earns $18.3-million in 2014
Related: The CEO of this Nevada gold producer is "all in"
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This is not investment advice.All facts are to be checked and verified by reader. As always please do your own due diligence.
From above:
“Red Eagle will still need to raise another ~$15 million in equity but there is no rush as construction can get well under way with the $65 million.”
Oh, really?
From the press release:
“Draw down of the Credit Facility is subject to Red Eagle Mining completing an additional equity financing of at least US$15,000,000.”
So yeah, no worries, we don’t have to worry about a $15 million equity raise is because the $65 million’s already in the bank! Um, actually, Orion won’t give us the $60 million until we dilute existing shareholders by another 60% or so. So there’s that.
Seriously guys, shape up.